US Announces Seizure of $3.36B in Stolen Bitcoin
Facts
- The US Dept. of Justice on Monday announced a historic seizure of bitcoin stolen nearly a decade ago from the Silk Road dark web marketplace, along with the conviction of the man responsible for the theft.
- According to the announcement, authorities raided James Zhong's house in Georgia last year and seized over 50K bitcoin (worth more than $3.36B USD at the time) that was hidden in an underground floor safe and in a circuit board concealed in the bottom of a popcorn tin.
- Zhong pleaded guilty last Friday to one count of wire fraud — which carries a maximum sentence of 20 years — for tricking the Silk Road's processing system into releasing the funds to his accounts in 2012, when he was 22. His sentencing is scheduled for February 2023.
- Silk Road marketplace was a dark web forum where illegal and illicit products were bought and sold with cryptocurrency. It was launched in 2011, but the FBI shut it down two years later. The platform's founder is now serving a life sentence in prison.
- At the time, this Bitcoin recovery was the largest cryptocurrency seizure in DOJ history. However, the Bitcoin has plummeted in value since it was recovered and, as of November 2022, it's worth roughly $1.05B, making it the second largest seizure.
Sources: Justice, TechCrunch, Reuters, CNBC, and Axios.
Narratives
- Pro-establishment narrative, as provided by Wired. This record seizure, and the arrest of Zhong, are indications of the progress being made by US authorities in the fight against cybercrime, particularly in the recovery of illicitly gained cryptocurrency. This case is yet another notch in the belt for IRS Criminal Investigations, which continue to find multi-billion dollar troves of stolen cryptocurrencies and disrupt dark web markets.
- Establishment-critical narrative, as provided by NY Times. Why did it take authorities almost a decade to track down such a large sum of stolen currency? If this money had been hard cash, the FBI would've put significantly more effort into tracking down Zhong and recovering the stolen funds. It's certainly a success that the Bitcoin was finally recovered, but the time that it took to achieve indicates alarming gaps in the FBI's approach to fighting cybercrime.